Politics

FACT CHECK: Does The US Have A Trade Deficit With Canada?

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President Donald Trump said in a tweet Thursday that the U.S. has a trade deficit with Canada.

We do have a Trade Deficit with Canada, as we do with almost all countries (some of them massive). P.M. Justin Trudeau of Canada, a very good guy, doesn’t like saying that Canada has a Surplus vs. the U.S.(negotiating), but they do…they almost all do…and that’s how I know!

— Donald J. Trump (@realDonaldTrump) March 15, 2018

“We do have a Trade Deficit with Canada, as we do with almost all countries,” Trump tweeted.

Verdict: False

The U.S. has an overall trade surplus with Canada.

Fact Check:

Trump’s tweet followed a Washington Post story that reported that Trump had admitted to making up facts about trade with Canada.

During a fundraising speech, Trump recounted a meeting with Canadian Prime Minister Justin Trudeau, according to the report. “Nice guy, good-looking guy, comes in – ‘Donald, we have no trade deficit.’ … I said, ‘Wrong, Justin, you do.’ I didn’t even know … I had no idea,” Trump said.

Trump then said he called an aide to check the trade deficit number. “Well, sir, you’re actually right. We have no deficit, but that doesn’t include energy and timber. … And when you do, we lose $17 billion a year,” reported the aide, according to Trump.

White House press secretary Sarah Sanders addressed Trump’s claims in a tweet. “In 2017 we had a $17.58 B trade deficit. In January 2018 we had a$3.63 B [sic] trade deficit. Both reflect trade in goods. Which is exactly what @POTUS referenced,” she wrote, and linked to Census figures on the goods trade balance.

Sanders and Trump cite only one portion of the total trade balance. Additional figures show that the U.S. has an overall trade surplus with Canada, not a deficit.

The Office of the U.S. Trade Representative (USTR) says that the U.S. had a trade surplus with Canada of $12.5 billion in 2016. The Bureau of Economic Analysis (BEA) reports slightly different figures, but it also found a trade surplus with Canada of $7.7 billion in 2016 and $2.8 billion in 2017. (The BEA uses an adjusted accounting method to eliminate duplicate transactions and value transactions at market prices.)

The total trade surplus with Canada combines the value of trade in two categories: goods and services. The goods category accounts for the trade of physical items like vehicles, metal and lumber. Intangible products like movie and music licenses, insurance and transportation fall under the services category.

Census figures do show that the U.S. has a goods trade deficit with Canada, which means that the U.S. imports more physical items from Canada than it exports to Canada. But the goods deficit that Trump and Sanders cite is offset by the services surplus. The U.S. provides more services to Canada than it receives.

BEA figures show that the $23.16 billion goods deficit combined with a $25.93 billion services surplus comes out to a $2.77 billion overall trade surplus in 2017.

The slight trade surplus with Canada is relatively new. Before 2015, the U.S. had a goods and services trade deficit with Canada, according to the BEA.

Trump frequently overstates the size of trade deficits and does not define his terms to specify that he is referencing only the goods deficit. He has claimed that the U.S. trade deficit with China is $500 billion though it is $337 billion, and said that the U.S. global trade deficit is $800 billion though it is $566 billion. (The global goods trade deficit alone, however, is $810 billion.)

Canada was the third largest supplier of goods to the U.S. in 2016, according to the USTR. Significant imports from Canada included vehicles, mineral fuels, machinery and plastics. Canada also exports 90 percent of its steel to the U.S.

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